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Revenue for the fourth quarter of 2008 includes $45.2 million attributable to the business of Photon Dynamics, Inc., which Orbotech acquired at the beginning of October.
The company made a net loss for the fourth quarter of 2008 of $101.2 million, or $2.98 per share, compared with a net loss of $43.1 million, or $1.29 per share, in the third quarter of 2008, and a net loss of $1.1 million, or $0.03 per share, in the fourth quarter of 2007.
The fourth quarter 2008 loss is after an impairment charge of $88.0 million, related to goodwill associated with the company's flat panel display (FPD) business, $5.1 million in amortization of intangible assets arising principally from the PDI acquisition and a write-off of $6.5 million relating to in-process research and development relating to that transaction, a charge of $5.1 million in connection with the scaling down of the company's assembled printed circuit board (PCB) operations, and a restructuring charge of $3.4 million relating to the second phase of the company's cost reduction program.
Revenue for 2008 as a whole totaled $429.5 million, compared with $360.7 million in 2007. Net loss for the year was $135.3 million, or $4.04 per share, compared with net profit of $1.5 million, or $0.04 per share, in 2007.
At the end of 2008, Orbotech had cash, cash equivalents, marketable securities and long-term investments of approximately $125 million, including $19.2 million of auction-rate securities (ARS) primarily tied to student loans; and $160 million in debt, which it borrowed from Israel Discount Bank in connection with the PDI acquisition. Its announcement said, "The company continues to place a very high priority on the management of its cash flows and believes that its proven ability to manage cash, including in times of difficulty, will be a critical factor in enabling Orbotech to emerge strongly from the current global recession."
Orbotech is in the process of reducing its activities in the assembled PCB business. During the first quarter of 2009, it signed an agreement with Orpro Services s.r.l. of Italy, for the sale of its assembled PCB business in Europe and the Americas. The transaction is subject to customary conditions to closing, including any requisite regulatory approvals. The company plans to continue to support and service its installed base of assembled PCB systems in the Asia Pacific region.
As for its FPD business, Orbotech said that, beginning in the fourth quarter of 2008, it had been experiencing a decline in new FPD equipment orders. "The current overall limited market visibility makes it difficult to predict exactly when FPD manufacturers will renew their fabrication expansion plans," Orbotech said.
Orbotech expects to realize cost savings of $65-70 million in 2009 through cost cutting and through synergies from the PDI acquisition, while the costs associated with these savings are reflected in the restructuring charges recorded in 2008.
Orbotech CEO Rani Cohen said, "We have taken prompt and decisive steps to re-align the company's cost structure in light of the downturn in our business resulting from the worldwide economic situation.
"As has been our consistent practice in the past, even in these challenging times we will continue to develop and provide to our customers new and innovative FPD, PCB, recognition and medical solutions, based on the latest and most advanced technology -- a recent example of which is our delivery, during the fourth quarter of 2008, of the world's first FPD-AOI system for Generation 10 glass panels. This will enable the company to maintain its leadership position in the industries that it serves and, looking forward, to capitalize on the business opportunities that will arise when economic conditions improve."
Orbotech's products include automated optical inspection and production and process control systems for bare printed circuit boards, imaging solutions for PCB production and AOI, test and repair systems for flat panel displays. The company also markets computer-aided manufacturing and engineering solutions for PCB production.
Orbotech shares closed at $4.10 in New York on Friday, giving the company a market cap of $137 million.
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